But How will a handful or underpaid regualtors police as army of super rich bank lawyers?

Regulators Set to Approve Toughened 'Volcker Rule'

Agencies Plan Votes Next Week After Adding More Restrictions on Hedging by Banks

U.S. regulators are expected to approve next week a toughened version of the Volcker rule, ushering in an era of stricter oversight for Wall Street with restrictions on the trading banks can do with their own money.

Four of the five agencies wrestling over the rule since it was proposed by President
Barack Obama
in January 2010 said Tuesday that they will vote Dec. 10 on a
finished version of the trading curbs. The fifth agency, the Securities
and Exchange Commission, is likely to take action "on or about" the same
day, SEC Chairman
Mary Jo White
said.

The trading crackdown is named after former Fed
chairman Paul Volcker, shown at a conference earlier this year.
Bloomberg News

Barring a last-minute surprise, the
votes will result in tighter restrictions on certain trading activities
that go beyond what regulators had agreed to just a few weeks ago,
according to people familiar with the matter. Since then, regulators
have been locked in tense negotiations that threatened to upend the
provision.

Under the final rule,
regulators are expected to closely track trading activities with an eye
on whether certain trades known as hedges are designed to post a profit
rather than offset risks that accompany trading with clients.

The
finished version of the Volcker rule is likely to require that hedges be
designed to reduce specific risks, according to a portion of the
proposed rule reviewed by The Wall Street Journal.

Hedging
activity should shrink or alleviate "one or more specific, identifiable
risks" such as market risk, currency or foreign-exchange risk, and
interest-rate risk, the language says.

"This is the new era of Big Brother banking," said
Michael Mayo,
an analyst with CLSA Americas. "Now banks' fortunes are more closely tied to the government."

It
isn't clear if the final version of the rule will contain identical
language from the proposal, but the five federal agencies have largely
reached agreement on how to define hedging activities, according to
people familiar with the discussions.